Introduction: The evolving channel partner landscape in the UK

The UK channel partner ecosystem is experiencing one of those rare instances in which everything shifts at once. Not the incremental changes we’ve seen in years, but significant fundamental alterations that force everyone to reconsider how they work.

The data is here, and it is telling us that things are on the up and up. The UK affiliate and partner marketing business received £1.7 billion in investment in 2024, marking a 9% year-on-year increase despite economic challenges. Throughout the year, it generated a total of 360 million sales and delivered £2.2 million in revenue every hour. This is not a failing industry barely surviving; it’s a market that has figured out how to prosper amid constant change.

The channel has changed. What worked in 2020 doesn’t cut it anymore. Vendors are shifting support models, and clients expect capabilities that didn’t exist three years ago. The partners winning today? They adapted early.

Everyone else is scrambling, losing ground while agile competitors close deals they couldn’t touch before.

Nexus Expert Research helps channel partners stay competitive by connecting them with specialized talent, without the cost of permanent hires.

What are channel partners and why they matter

Channel partners sit between tech vendors and end customers, doing the actual work of implementation, support, and ongoing management. They’re VARs (value-added resellers), MSPs (managed service providers), systems integrators, consultants, and a dozen other variations on the same basic model: taking vendor products and making them actually work for real businesses.

Without channel partners, the tech industry would grind to a halt. Vendors can’t possibly handle every customer relationship, every deployment, every support ticket. They need partners who understand local markets, have existing client relationships, and can deliver the hands-on service that enterprise customers demand.

For UK businesses, the right partner turns tech investments into real business value. They handle integration, migration, training, and provide critical support when it matters most.

The best partners solve problems, not just resell products. They bring expertise clients lack in-house and act as trusted advisors.

Current state of the channel partner industry in  the UK (2025)

The UK channel market is undergoing a major shift. As of 2025, 44% of partner businesses identify as MSPs, while VARs now make up just 30%, a reversal from five years ago. MSPs are thriving because their model fits today’s reality: recurring revenue, long-term client relationships, and service-based margins consistently outperform one-off product sales.

Margins are tightening across the board. Vendors are increasingly favoring direct sales and SaaS models, bypassing traditional channels. Clients are savvier. They compare prices in minutes and know what services should cost.The days of easy profits from hardware sales are over.

What’s growing? Services. Managed services, cloud migrations, cybersecurity, and AI deployments are in high demand. Partners who’ve shifted from product-centric to service-centric models are thriving. Those still focused on “moving boxes” are falling behind.

Talent is the other pressure point. UK channel firms are competing for the same pool of cloud engineers, security specialists, and AI experts. According to recent reports, the average tenure for technical staff in channel organizations is under two years, and headcount growth among fast-growing MSPs has surged by over 30% in the last three years. Recruitment is slow, salaries are climbing, and retention is a constant battle.

The partners who’ve figured out alternative talent models, whether through strategic partnerships, expert networks, or flexible staffing arrangements, have a real advantage. The ones still relying on traditional hiring are constantly playing catch-up.

Key trends shaping the channel partner ecosystem

Digital transformation and cloud-based solutions

Digital transformation in the UK is now synonymous with cloud. 96% of organisations use some form of cloud service, and 92% run hybrid or multi cloud environments to balance performance, control, and cost. On-premise infrastructure is rapidly becoming the exception.

Channel partners are expected to deliver deep expertise across AWS, Azure, and Google Cloud. Multi-cloud competency is no longer optional, it’s the baseline for competing in enterprise deals.

This shift has transformed the business model. Recurring revenue from managed cloud services has overtaken one-time hardware sales. Partners are now judged on their ability to optimize cloud spend, manage workloads across platforms, and deliver measurable ROI.

Cloud marketplaces are reshaping deal flow. More transactions are happening through vendor ecosystems, reducing partner control but unlocking co-selling opportunities. The partners who’ve adapted to these new dynamics are tapping into fresh revenue streams.

AI and automation are also driving differentiation. According to Unisys UK mid market data, adoption of multiple public clouds is projected to surge from 11% to 46% by 2028, outpacing both EMEA and global averages. Partners who integrate AI into cloud strategies are gaining a competitive edge.

Growing importance of managed service providers (MSPs)

Managed Service Providers (MSPs) now account for 44% of UK channel businesses, according to the CyberSmart MSP Survey 2025. This marks a significant shift from 28% in 2020. The MSP model is structurally advantageous: it enables predictable recurring revenue for providers and stable, subscription-based costs for clients. This alignment of incentives supports long-term service relationships and upsell opportunities.

Cybersecurity is the primary growth vector. The UK cybersecurity market is projected to reach £10.6 billion by 2025, with managed services comprising a growing share. Managed Detection and Response (MDR) has become a standard offering, 87% of UK MSPs now provide MDR services. This is a direct response to increased threat exposure: ransomware incidents rose 37% year over-year, and regulatory frameworks like GDPR and NIS2 have raised compliance costs.

Market saturation is creating pressure on differentiation. Most MSPs offer similar bundles, endpoint protection, patch management, cloud backup, at similar price points. To remain competitive, MSPs are specializing by industry vertical (e.g., legal, healthcare), technology stack (e.g., Microsoft 365, AWS), or service type (e.g., SOC-as-a-Service). Generalist models are increasingly unviable.

Economies of scale are critical. MSPs must maintain sufficient client volume to amortize infrastructure costs (e.g., RMM platforms, SOC operations) and reduce per-client overhead. This has led to increased M&A activity: UK MSP acquisitions rose 22% in 2024, driven by larger firms absorbing smaller ones for client base expansion and geographic reach.

Strategic alliances and vendor partnerships

Vendor partnership programs have evolved into performance-driven ecosystems. Entry-level participation is no longer sufficient. Vendors now require certified technical competencies, documented client outcomes, and strategic alignment with product roadmaps. According to some estimates, over 70% of UK vendors have added technical certification requirements to their partner tiers in the last two years.

Strategic alliances and mergers are accelerating. Channel consolidation is driven by the need for scale, geographic reach, and service breadth. Hemlock Equity reports that cross-regional partner mergers in the UK increased by 18% in 2024, with MSPs and integrators combining resources to compete for enterprise contracts.

Partner tiering has become a gatekeeper for opportunity. Gold and platinum partners receive priority access to deal registration, co-selling programs, and marketing funds. Lower-tier partners are increasingly excluded from strategic engagements. The gap is widening: top-tier partners close 3x more enterprise deals on average.

Co-opetition is now standard practice. Complex client projects often span multiple domains—cloud infrastructure, licensing, security, compliance. No single partner can cover all requirements. As a result, partners are collaborating across competitive lines, forming temporary alliances to deliver integrated solutions. This shift reflects a broader industry trend: solution completeness now outweighs exclusivity.

Data-driven decision making and analytics

UK channel partners are now applying the same analytics discipline to their own operations that they once reserved for client engagements. Adoption of platforms like Power BI, Tableau, and Looker has accelerated, particularly among mid-sized MSPs and integrators. Internal estimates suggest that over 60% of UK channel firms now use business intelligence tools to guide sales, resource allocation, and client retention strategies.

Client data has become a core competitive asset. Partners who can deliver real-time infrastructure performance metrics, cost trend analysis, and actionable optimization insights are outperforming those relying on generic quarterly reviews. Renewal rates are significantly higher among firms that integrate client-facing dashboards and predictive analytics into their account management workflows.

Strategic resource planning is improving. Analytics-driven partners are making sharper decisions about which verticals to pursue, which deals to prioritize, and which clients show signs of churn risk. Internal benchmarking shows that data-informed deal targeting improves win rates by up to 28% compared to intuition-based approaches.

Advanced analytics is now foundational. Partners using machine learning models for trend detection, anomaly spotting, and workload forecasting are gaining agility. They respond faster to client needs, anticipate infrastructure issues before they escalate, and tailor services with greater precision. Experts estimate that predictive analytics adoption among UK channel firms will double by 2026, driven by competitive pressure and client expectations.

This is no longer a differentiator, it’s a baseline requirement for running a modern channel business.

Sustainability and ESG-focused partnerships

ESG isn’t just corporate virtue signaling anymore. Large UK enterprises have actual sustainability targets, often mandated by regulation or investor pressure. They’re asking their technology partners what their carbon footprint is and how their solutions contribute to ESG goals.

Green cloud computing has become a real consideration in technology decisions. Clients want to know the energy efficiency of data centers, whether cloud providers use renewable energy, and how to optimize workloads for minimal environmental impact.

Partners who can speak credibly about sustainability, help clients measure and reduce their technology carbon footprint, and incorporate ESG considerations into their recommendations are differentiated. It’s not the primary buying criteria yet, but it’s increasingly a tiebreaker between similar proposals.

The circular economy is also affecting how partners think about hardware lifecycle management. E-waste regulations are tightening. Clients want refurbishment and recycling programs, not just disposal. Partners facilitating this are adding value beyond traditional technology services.

Challenges faced by UK channel partners

1. Profitability pressure is structural.

Traditional revenue streams (hardware resale, one-time licensing) are shrinking. SaaS vendors increasingly sell direct, and margin compression is widespread. Partners must shift toward service-led models with recurring revenue to maintain viability.

2. Talent constraints limit scalability.

Recruiting qualified cloud architects, cybersecurity specialists, and AI engineers is slow and expensive. Retention is difficult, with many technical hires leaving within 12–18 months. This creates delivery bottlenecks and forces partners to delay or decline projects.

3. Vendor program volatility adds operational complexity.

Partner benefits, margin structures, and certification requirements change frequently. Managing multiple vendor relationships now requires dedicated staff and systems, resources many partners lack.

4. Client expectations have evolved.

Enterprise buyers now expect consumer-grade experiences: fast onboarding, transparent pricing, and intuitive interfaces. They want lower costs, faster delivery, and bettersupport, all at once. Meeting these demands requires rethinking service design and delivery.

5. Competition is intensifying.

Cloud vendors are selling directly to mid market clients. Software companies are bundling services into their platforms. Global integrators are entering the UK market. Partners face pressure from players with more scale, automation, and capital.

Opportunities for growth in the UK market

Expansion into managed services represents the clearest growth path for traditional VARs still making the transition. The MSP model has proven its resilience, and there’s still room for partners who can bring specialized expertise or vertical focus.

Hybrid cloud solutions are where the action is. Most enterprises aren’t going all-in on one cloud platform. They’re running workloads across multiple environments, which creates complexity that needs managing. Partners who can orchestrate these hybrid environments are in high demand.

Specialization is creating new niches. Partners who go deep in specific technologies, industries, or use cases are commanding premium rates. Healthcare technology implementation, financial services compliance, retail cloud infrastructure. Pick a lane, become genuinely expert, and clients will pay for that expertise.

AI is wide open. Most channel partners don’t have real AI capabilities yet, but their clients are asking for it. The partners who build or access AI expertise now will have a significant advantage over the next few years. This isn’t about reselling AI tools. It’s about implementing them in ways that actually drive business value.

Cybersecurity services keep growing. The threat landscape gets worse every year. Regulations get stricter. Businesses need help, and they’re willing to pay for it. Security operations center (SOC) services, incident response, compliance management, these are all high-margin opportunities for partners with the right capabilities.

Advisory services are undervalued. Many partners could charge more for strategic consulting, technology roadmapping, and architecture design. Clients need this advice, but partners often undersell it or throw it in free to win product deals. There’s real money in being a trusted advisor, not just an implementer.

Alternative talent models are a competitive differentiator. Partners who’ve figured out how to access specialized expertise without hiring full-time staff can scale faster and take on more diverse projects. Whether through expert networks, strategic partnerships, or flexible staffing, having access to talent when you need it is a massive advantage.

Future outlook: What’s next for channel partners in the UK

The evolution from reseller to strategic advisor is accelerating. Partners are being pushed to offer technical expertise and market insights rather than just product fulfillment. AI-enabled tools and collaborative vendor relationships are making this transition possible, but it requires a fundamentally different skillset.

The next few years will separate the partners who adapted from those who didn’t. The market is moving toward more specialized, service-centric, and technology-diverse models. Partners who can demonstrate deep expertise, deliver measurable outcomes, and access the right talent at the right time will thrive.

Consolidation will continue. Smaller partners without clear differentiation will struggle. Acquisitions will accelerate as larger partners and private equity look for bolt-on capabilities or client bases. This isn’t necessarily bad, it’s just reality.

Vendor relationships will keep evolving. Direct sales will increase for simple transactions. Partners will focus on complex implementations and ongoing management. The value partners provide will need to be clearer and more defensible.

AI will reshape everything. Not in a “robots are taking over” way, but in practical terms of how services are delivered, how client needs are identified, and what skills matter. Partners who can integrate AI into their service delivery and client solutions will have an edge.

The most successful UK channel partners will be the ones who treat themselves like the businesses they advise: data-driven, technology-forward, and willing to change when the market demands it.

Conclusion: Adapting to the changing channel  landscape

The UK channel partner market isn’t broken, but it’s definitely not the same industry it was five years ago. With £1.7 billion in investment and 9% growth despite economic uncertainty, the market is proving it can adapt. But that growth isn’t distributed evenly. It’s going to the partners who recognized early that selling products isn’t enough anymore. You need services expertise, specialized capabilities, and access to talent that can deliver on increasingly complex client demands. The shift to 44% MSPs in the partner mix tells you everything about where the market values lies: recurring revenue, ongoing relationships, and service delivery.Fighting these changes is pointless. The market has moved. Client expectations have shifted. Technology has evolved. The question isn’t whether to adapt, it’s how quickly you can do it without disrupting your existing business.

For partners willing to embrace new models, whether that’s managed services, expert networks, or deep specialization, the opportunities are real. The UK market is large enough and complex enough to support partners who bring genuine value. But that value has to be more than just access to vendor products. It has to be expertise, outcomes, and results. The channel isn’t dying. It’s evolving. And the partners who evolve with it will do just fine.